Central banks and regulators are reviewing the impact of COVID-19 on financial markets.  They are considering the appropriate balance between private sector resilience and reliance  on extraordinary central bank liquidity support, and whether interventions and temporary  measures to mitigate the immediate impact on liquidity in the financial markets have set  precedents – appropriate or otherwise. They also have ongoing concerns about the potential  impacts of the rate of economic recovery and heightened credit risk, especially in the fixed  income markets.

Against this backdrop, securities regulators are undertaking further analyses and are  contemplating additional requirements, such as measures to address the pro-cyclicality in  margin calls in the derivatives market. The pandemic has also renewed their determination  to pursue issues that were already on regulatory agendas, including the transition to risk-  free rates (RFRs), certain trading strategies and liquidity management in open-ended investment funds. Firms should factor these debates into the reviews of their operations and  risk assessments.